Shares of Nvidia took a huge spike on Monday, highlighting the biggest single-day market loss in history. The stock plunged 17%, wiping out nearly $600 billion in market value.
The massive decline stemmed from fears about U.S. dominance in artificial intelligence as the Chinese company DeepSeek showcased a breakthrough large-language model (LLM) developed at a fraction of the cost seen in America.
The company’s valuation fell from $3.5 trillion to $2.9 trillion, falling behind Apple and Microsoft.
DeepSeek Challenges Nvidia’s AI Leadership
The release of DeepSeek’s advanced AI model is the primary reason for Nvidia’s stock decline. DeepSeek, a Chinese AI company, claims to have developed its LLM at a fraction of the cost spent by its American counterparts.
Although Nvidia GPUs were used in the process, the company reportedly spent just $5.6 million on the technology.
Even if this figure is underestimated, it disrupts the perception of Nvidia’s role as the cornerstone of high-cost AI innovation. Nvidia’s GPUs, which can cost up to $25,000 each, are a major source of the company’s revenue.
If you thought Nvidia was doing well before, 2024 has taken things to a whole new level. The company’s net profits have skyrocketed from $4.8 billion in 2022 to $66.7 billion this year. (Yes, you read that right, it’s not a typo!) The secret behind this massive growth? A little help from their very influential friends. Major U.S. companies like Meta, Tesla, and OpenAI just can’t seem to get enough of Nvidia’s cutting-edge technology.
However, a new player, DeepSeek, is showing that it’s possible to develop advanced AI systems at much lower costs. This is a big deal because it suggests that companies no longer need to spend as much to create cutting-edge AI.
Naturally, this raises some important questions. If American tech giants start looking for more affordable alternatives, could Nvidia’s stronghold on the market begin to weaken? It’s a possibility that’s starting to draw more attention in the tech world.
Wall Street Reacts
Monday’s events marked Nvidia’s worst percentage drop since March 2020, during the onset of the COVID-19 pandemic. The 17% dip not only shook investor confidence but also led to broader losses across the tech sector.
- The S&P 500 fell by 1.5%.
- The Nasdaq, heavily concentrated with tech stocks, declined by 3.1%.
- Other AI-related companies, including chipmakers Arm and Broadcom and data giant Oracle, all saw drops of at least 10%.
Despite this, Nvidia’s spokesperson issued a statement describing DeepSeek’s model as an “excellent AI advancement.”
Nvidia CEO Jensen Huang Loses Billions
The market loss had a huge impact on Nvidia CEO Jensen Huang, whose net worth dropped by $21 billion in a single day. Huang, who owns 3% of the company, saw his wealth shrink from $124.4 billion to $103.1 billion.
For years, Jensen Huang has been the driving force behind Nvidia’s rise to the top of the AI world. Under his leadership, the company didn’t just grow, but it also set the standard for AI infrastructure. But as you all know, the tech world never stands the same. New players like DeepSeek are beginning to make many innovations, and they are not just chasing Nvidia, but they are aiming to challenge it. If these up-and-comers gain enough ground, Nvidia could start to feel the pressure, with its profits and dominant market position at risk. The big question now is not just how Nvidia will respond, but how quickly it can adapt.
Surprising Market Stats
Sometimes, the numbers in the stock market are so big, they almost stop feeling real, and Nvidia’s recent loss is one of those moments.
In a single day, Nvidia’s market cap has dropped a $589 billion. To grasp just how massive that is, let’s put it into perspective: this single-day drop is larger than the entire market value of major, household-name companies like UnitedHealth, Exxon Mobil, and Costco. Yes, combined.
Even more astonishing, this loss is more than double Nvidia’s previous worst day, which happened back in September 2024 when it lost $279 billion in market value. At the time, that seemed unbelievable; now it almost feels small by comparison.
It’s a powerful reminder of how quickly fortunes can change, even for the biggest players in the market.
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